How to play on the growth of the dollar?

Analysts believe that the growth of the dollar will benefit not only the “inner” and and European assets, as well as assets in other regions.

“From the strengthening of the dollar will benefit shares of European companies,” – says Pascal Blanc, chief investment officer of Amundi Asset Management, which manages the assets are worth more than $ 1 trillion.

“Europe – a region where most large companies are global,” – he says. “To some extent, this compensates for weak economic growth in Europe, especially against the euro’s decline.”

The weakening of the euro means the growth of other currencies, particularly the dollar.

Since the end of June the single currency has lost 6% against the “green.” The dollar index reached its maximum in summer 2010 levels, and with the end of June, up more than 6%.

Economists believe that the rise in the dollar strengthens confidence in the American economy, especially when compared with disappointing economic outlook in Japan, Europe and China.

Benefits for Asia

Some experts believe that the strengthening of the dollar will benefit Asian companies. “A strong dollar is now evidence of solid economic growth the United States,” – said in a note Citigroup, which was released on Monday. “Among the emerging markets that can benefit from Asia.”

Traditionally a strong dollar was considered a negative factor for the emerging markets, however, Citigroup notes that smaller countries peg their currencies to the “green”. In addition, the corporate sector in emerging markets is becoming more international.

However, not all emerging markets will benefit from a stronger dollar, mainly due to commodity prices, which are denominated in United States dollars.

“From the strengthening of the dollar losing commodity exporters, but win – they Importers – ie it is a negative factor for Europe, Middle East, Africa and Latin America, and the positive – for Asia,” – says Citigroup.

Shares of American companies – have been left behind?

Increase in the dollar would be “slow down” US stocks. S & P 500 shows the outperformance in 2009 against the backdrop of a weak dollar, Barclays wrote in a note, which was published on Monday. Since late 2009 the index gained about 80%.

“Soft Fed policy has led to a weakening of the dollar, while at the same time increasing profitability, resulting in share buybacks,” – says Barclays.

“We do not claim that the rise of the dollar will necessarily lead to an increase in US stocks,” – adds Barclays. “At the very least, you need a significant shift trend of net capital outflows, which is very unlikely, taking into account the already stretched mute their quotes.”

This year, there was an outflow of foreign capital from American stocks, while the volume of purchases of foreign shares of American investors only grew.

In August was registered outflows of $ 1.6 billion diversified investment funds the United States, and this trend continues the 5th consecutive month, according to the analytical agency Lipper. Some experts believe that the expectations of continued growth of the dollar will stimulate the flow of foreign investment in the shares of American companies.

“Here there is a strong incentive,” as a strong “green” will cause rise in profits when converted back into domestic currency, said Beat Siegenthaler, chief strategist specialist UBS, noting that in recent years there was an outflow of capital from European equities in favor of American, on the background Russian-Ukrainian conflict.